Just what is clean technology and, more importantly, whyshould it matter to CPAs?

Chances are, most firms already work with clean techclients -- they are the alternative energy, recycling and agriculture companies,vendors and businesses. They are working to improve the quality of life andconditions of the environment at the same time, according to Lee Barken, CPAand IT practice leader at the firm of Haskell & White in San Diego.

And Barken should know, as he sits on the CleanTech SanDiego board of directors and writes and speaks on the topic. He points toCleantech.com as being the ultimate source for all things related to the cleantech sect, including a working definition of the industry: "Clean tech isnew technology and related business models that offer competitive returns forinvestors and customers, while providing solutions to global challenges."

According to Barken, "The unique opportunity ofclean tech is that this is an opportunity to engage and incentivize companiesto come up with solutions that reduce our impact on the environment."

Barken spoke to Accounting Today about how clean tech ismore than just a new client group, how CPAs can engage with their existingclients regarding this emerging area and the growing importance of carbonemissions on the balance sheet.

Is there a common denominator or characteristic that all cleantech companies have? That's a good question. Since there is so many differentways to define it, a lot of companies are trying to get under the tent. Thereare good parts and bad parts to that. Cleantech.com defines 11 industrysegments, and because the definition is really broad, there are a lot of waysto make clean tech activities inclusive.

How did you get started in this area? Does your firmserve clean tech clients? I've always seen this as more than just servicingclean tech clients. Don't get me wrong -- I'd like to have a large portfolio ofclean tech clients and focus on that, but there is a broader picture here and amessage of more than going out to find a new category of clients. It's findingnew opportunities inside of existing clients and being aware of how some of theindustry trends are going to affect their current client base because cleantech, and in particular carbon emissions, are going to be a lot broader. True,there will be opportunities that are going to create incentives for clean techcompanies, but I think there are implications for all businesses and that'swhere CPAs across the country need to get engaged and get involved.

Are CPAs becoming more engaged? Slowly, but not asquickly as I'd like to see.

If firms wanted to serve clean tech companies, what dothey need to know? I'm starting to see clean tech as more of a strategy andless of a category per se. You want to provide services for clean techcompanies and get engaged with the sector? My answer to that is start in yourown community. Find companies that are developing new technologies and, moreimportant, supporting civic efforts to develop clusters.

I'm serving on the board of CleanTech San Diego andthat's a nonprofit membership group started by the mayor's office to helpdevelop a cluster of clean tech companies. What we've discovered is that it'smore than one business; it's really developing that ecosystem of companies thatsupport a cluster. So, each of those efforts is going to be different, butthere seems to be critical mass gaining in a lot of cities across the countryto support this growing sector.

Are more companies starting to measure their carbonfootprint? There are efforts underway. A good predictor of future trends is tofollow policy-making discussions on what's coming down the road on a statelevel in California, on a national level in Congress and the EnvironmentalProtection Agency, and on an international level with the U.N. process inCopenhagen and Cancun, Mexico. Carbon emission legislation and regulation, inthe form of carbon taxes, cap and trade and other policy levers are all beingdiscussed. Every company that consumes energy, uses transportation fuels or hasa large real estate portfolio is going to be affected by these policydecisions.

Are companies looking for guidance on how to deal withcarbon? There's a lot of uncertainty right now and that's a concern forcompanies. Companies like to have regulatory certainty and legislativecertainty, and right now probably the biggest issue is that there is a lack ofclear direction on those fronts.

In January, the Securities and Exchange Commission made adecision to issue interpretive guidance to require greater consistency forregistrant disclosure of the effects of climate change on businesses. How willthis affect the work of CPAs? The SEC announcement wasn't new law, it was justproviding interpretation on existing law and it was basically acknowledgingthat climate change issues are relevant. There's a group called the ClimateDisclosure Standards Board that's really focused on how public entities caninclude meaningful disclosures in their public filing related to climatechange; it gives a really good frame work on how to accomplish that. That'ssomething CPAs should read and understand, because we are going to be advisingour clients on how to interpret these rulings.

Are clean tech companies more likely to choose CPA firmsthat are green? Yeah. It's broader than that, I don't think it's just cleantech companies that are demanding that, I find all of our companies areexpecting us to be good corporate citizens in all regards.

How does your firm engage with your clients around this?It's having awareness on how these issues are playing out in the policy frontand how those can affect companies. The moment you put a price on carbon, youhave an asset or liability on the balance sheet. How does that affect yourcompany? There are real winners and losers. The losers are any company with asupply chain that's built on legacy fossil fuels and the real winners arecompanies that figure out how to innovate.

So, if you are a company that has a very large realestate footprint, how do increasing energy costs affect you? If you are amanufacturer and have a lot of shipping, how does the changes in fuels affectyour supply chain? How does that affect your decision-making process on whereto source raw materials, on where to produce goods? The business implicationshere are pretty staggering and companies really need to be prepared for some ofthese changes.

On the CPA side - how we deal with that as accountants -down the road, carbon emissions are going to have disclosures around them basedon the SEC guidance, then there are going to be measurement and verificationissues and internal controls surrounding the systems.

Are clients coming to CPAs for advice, or are CPAsbringing this up with their clients? The trend is definitely changing. It usedto be that the accounting profession was bringing this to the clients; now theclients are bringing it to them and asking what are the opportunities. This isa particularly good area for tax folks. Proper tax strategy is a huge key inproject viability. CPAs can help their clients on the tax strategy side forunderstanding how to make these projects viable.


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